Chapter 04 · Section 4.1

Automated Exchanges

Which of the following is generally understood to be an automated option exchange?

a) An exchange on which premiums are determined by computer.
• b) An exchange on which bids and asks are entered by the market participants into a computer and visibly displayed.
  No. This is not enough: most non-automated exchanges have computers that record and display prices of executed trades, and often also the be bids and offers.
  c) An exchange on which a computer matches buy and sell orders and quotes.

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